In a significant decision, the Punjab cabinet on Monday approved to abolish octroi on petrol and diesel in the state. A decision to this effect was taken in a meeting of council of ministers held under the Chairmanship of Punjab chief minister Parkash Singh Badal here on Monday evening.
An official spokesman said the cabinet also gave nod for the requisite amendments in the Punjab Municipal Act, 1911, Punjab Municipal Corporation Act, 1976 and Punjab Municipal Fund Act, 2006.
The state government would issue required ordinances in this regard immediately. The state government had already abolished octroi on all items except electricity, petrol and diesel with effect from September 1, 2006.
"Levy of octroi of petrol and diesel was adversely affecting the sale of these products in urban areas of the state, which were adjacent to other states, because the rate of these products in the neighbouring states was much less," the spokesman said.
"Therefore there is a need to abolish octroi on petrol and diesel which is currently charged at the rate of 1% and 2% on diesel. Hence the amendment to the Punjab Municipal Act, 1911 has been proposed," he added.
The state government would compensate the local government department by enhancing the share of local bodies in the VAT from existing 10% to 11% which would offset the revenue loss following the abolition of octroi.
To enable the panchayats to give land to government departments, boards and corporations for implementation of projects of public importance, the cabinet also decided to remove the condition on the panchayat retaining 50% of cultivable land available with it after sale, gift or exchange as provided under Section 5 of Punjab Village Common Lands (Regulation) Act, 1961.
The state government would soon issue ordinance in this regard after following due legal procedure.
In another significant decision, the cabinet also decided that no retired official of the state government except the PCS would be re-employed in any form in future.